Taxes
What are direct and indirect taxes?
Direct Tax:Paid directly to the government by the individual (e.g., income tax)
Indirect Tax: Collected by intermediaries which are usually businesses (e.g., sales tax, VAT)
Adam Smith
What are the four types of market structures?
Perfect competition, monopolistic competition, oligopoly, monopoly.
What is an exchange rate?
The price of one currency in terms of another
How much your currency is worth when you trade it for another country's currency
What is economics?
The study of the allocation of scarce resources to meet unlimited human wants.
Who said this: "The avoidance of taxes is the only intellectual pursuit that carries any reward"
John Keynes
Who said: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
Adam Smith
What is market power?
The ability of a firm to influence or control the price of its product
What is trade surplus?
A country exports more than it imports
What is opportunity cost?
Opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action (foregone profit).
What is a flat tax system?
A single tax rate applied to all taxpayers, regardless of income level
Which school of economic thought emphasizes the following principles?
- Markets are naturally stable if left alone
- Government should limit its role (avoid excessive spending)
-Emphasizes controlling the money supply (monetary policy)
Monetarist Economics
What are barriers to entry a market?
Obstacles that make it hard for new firms to enter a market
What is a balance of payments?
A record of all financial transactions between a country and the rest of the world (records all money coming in and going out of a country)
What is the law of demand?
The law of demand states that a higher price leads to a lower quantity demanded and a lower price leads to a higher quantity demanded.
What is the name of the tax on goods considered harmful to health or society, used both to discourage consumption and raise revenue for public health?
Sin Tax
What is the idea that two people or countries can both benefit from trade even if one of them can produce more of everything called?
Comparative advantage
What is Antitrust?
Laws that prevent monopolies and promote competition
What are net exports?
The annual difference between a country's exports and imports
What is the invisible hand theory?
When individuals act in their own self-interest within a competitive market, they unintentionally create benefits for society as a whole.
what are tax incentives and subsidies?
Special policies that reduce tax burdens or provide direct support to encourage certain behaviors
What does neoclassical economics focus on? (modern schools of economics)
Focuses on rational decision-making, utility maximization, and market equilibrium (favors limited government intervention
What are the characteristics of a market with monopolistic competition?
-A market with many producers and relatively low barriers to entry
-Products are similar but not identical
-Prices may vary slightly but not significantly
-Advertising and branding are important
What is the #1 country on exports?
China
What does elasticity measure in economics?
Elasticity measures the responsiveness of one economic variable to a change in another.